Danske bank to close retail customer accounts

marathonic

ABC101 wrote: »

@marathonic.

I think you are misunderstanding something about Offset funds.

It's not a case you go from a 200k mortgage to a 100K mortgage if you have 100k offset.

From what I understand... you will still have a 200K mortgage.

The funds that are in your other accounts... i.e. current accounts... they will be returned to you.

For example... you have a mortgage of 200K and you also have 10K in your current account, as you use the funds in your current account during the month the balance of the current account will vary, ie. 10K on the 1st, down to 2K on the 27th, then you get your salary paid, and back up to 7K on the 29th.

The daily balance of the current account is deducted from the daily balance of the Mortgage account, so on some days you might have a NET balance of -190K, rising to -198K on the 27th of the month, and a net balance of -193K on the 29th of the month etc

So if Danske close the Offset mortgage... you still have a mortgage of 200K.. except the interest is charged at 3.65 or 3.2% instead of being charged at 4.65%

And your balance of your current account is given back to you, its not deducted from your mortgage balance. One will have to then lodge this to another bank etc

This perfectly matches my understanding of an offset mortgage. The funds that are returned, for those that are in the position I explained, would then be used to pay down the mortgage balance.

Some people have 50% offset against their mortgage for no other reason than it's nice to have the funds available. They don't see any need for the funds but it's not costing them anything to have them there.

Even if the bank were to give an option of keeping the offset account or getting a reduction of 1% on interest for removing the feature, there would be people who would opt for the 1% reduction.

ABC101

@ Marathonic,

Granted there will be some clients of Danske who will be in a position to clear 100K or 50K or whatever off their mortgage balance if they chose to do so.

But I would imagine the majority of Danske Bank clients would not be in this category, probably have a current account balance of less than 20K.

But I still don't think it is a good deal... and here's why....

I'm already getting 0.45% off my mortgage rate as it is...due to the fact that I have a Prestige account.

When my current account is closed... my mortgage will go from 4.2% to 4.65%.

Danske then give me the sweetener... 1% off the rate for my troubles... but for how long? Effectively my mortgage rate is going down by 0.55%.

Because I would imagine... my mortgage is now a variable rate mortgage... and of course the variable rate is variable... they can increase it at any time they like.

So I might be on 3.65% for the first 12 or 14 months... but then a rate increase occurs.. .and before you know it... I'm back up to 4.2%, with 22 years to go and nothing to Offset it against.

In addition the ECB is at very low rates... 0.5%... so when Europe starts to grow... the ECB will commence raising rates to 2.5% or so. Lots of excuses for Danske to raise my new mortgage.

With the Offset you were encouraged to save up money in your current account, and the savings where not subjected to DIRT tax, and you still had the flexibility / option / choice to go on a nice holiday if your current account was big enough etc etc.

marathonic

ABC101 wrote: »

@ Marathonic,

Granted there will be some clients of Danske who will be in a position to clear 100K or 50K or whatever off their mortgage balance if they chose to do so.

But I would imagine the majority of Danske Bank clients would not be in this category, probably have a current account balance of less than 20K.

In this case, is a 1% reduction on their entire mortgage balance not better than having a current account balance of < €20k offset against their mortgage?

Also, I'm not familiar with the terms and conditions of the Prestige account and Offset mortgage account but I'd imagine that the 0.45% discount is a Prestige account advantage and not mentioned anywhere in the terms of the mortgage account. If this is the case, you may ignore it for any calculation. I don't think the Prestige account has terms that contract Danske to continue offering it for any specific period of time and, with it gone, the discount is gone.

I know this won't suit a lot of people, and the earlier reference to keeping tax liabilities in the current account until year end is a prime example. However, my thoughts are that the offer will actually suit a lot of people.

One final point - is the headline rate on the Danske Offset Mortgage fixed? Are Danske not equally as likely to raise the rate on this account as they are with the account being offered with a 1% reduction?

ABC101

marathonic wrote: »

In this case, is a 1% reduction on their entire mortgage balance not better than having a current account balance of < €20k offset against their mortgage?

Also, I'm not familiar with the terms and conditions of the Prestige account and Offset mortgage account but I'd imagine that the 0.45% discount is a Prestige account advantage and not mentioned anywhere in the terms of the mortgage account. If this is the case, you may ignore it for any calculation. I don't think the Prestige account has terms that contract Danske to continue offering it for any specific period of time and, with it gone, the discount is gone.

I know this won't suit a lot of people, and the earlier reference to keeping tax liabilities in the current account until year end is a prime example. However, my thoughts are that the offer will actually suit a lot of people.

One final point - is the headline rate on the Danske Offset Mortgage fixed? Are Danske not equally as likely to raise the rate on this account as they are with the account being offered with a 1% reduction?

It all depend on how long one would have offset 20K in the current account against the mortgage account.

It depends on how long the 1% reduction remains in force as well.

I've saved nearly 11K by offsetting my current account against my mortgage balance over the last 6 years.

Yes, the 0.45% reduction, is only due to a Prestige account, which costs in itself 120 euro / year (I think, open to correction).

So when the current account is gone... the 0.45% goes with it, as does my 120 euro fee.

Yes the Offset is a variable rate mortgage.. and even if we where to keep it as an offset.. it could be increased at any time for any reason.

But its for the longer term ie. 10 years + that savings in offsets really come into their own.

All in all... I don't think it is a good deal. In effect my mortgage will go from 4.2% to 3.65% and it could be back up to 5% within 24 or 36 months.

I think there is a bit of flap going on about the selling of Irish Nationwide mortgages at the moment.. people are scared that the new owner of the mortgage book could increase rates rapidly, i.e. get the mortgage book at a knock down value, then ramp rates to get higher profits etc. (open to correction, but that's my opinion). There have been some articles in the media about protection for mortgages.

The fact that Danske Bank are removing something which is agreed, its known, but its being replaced with a 1% sweetener which could prove very very temporary is not a good deal in my opinion.

Danske used to give very competitive rates / fees etc, but they have increased their rates over the last 14 months or so that they are now fairly expensive to bank with... obviously trying to discourage retail business.

makeorbrake

Just got the bumpf from them in this mornings post to sort out closing of mortgage feeder account...not had a look at it yet.

yop

I dont have my complete breakdown spreadsheet but looking at whats outstanding on my mortgage.
IF they give me a 1% reduction, over the 20 years thats left then it will equate to 21k euro of a difference between the exact rate I am paying now. Of course thats IF they retain it as 1%, not .55% when they remove the accounts.

That is a long long way short of what the savings I would have if I had my offset.

Mex Mick

yop wrote: »

I dont have my complete breakdown spreadsheet but looking at whats outstanding on my mortgage.
IF they give me a 1% reduction, over the 20 years thats left then it will equate to 21k euro of a difference between the exact rate I am paying now. Of course thats IF they retain it as 1%, not .55% when they remove the accounts.

That is a long long way short of what the savings I would have if I had my offset.

Yeah but are you not ignoring the interest you will earn on the funds in the offset account ? Maybe 1.8% net of dirt

yop

Mex Mick wrote: »

Yeah but are you not ignoring the interest you will earn on the funds in the offset account ? Maybe 1.8% net of dirt

What funds? I won't have an offset account if Danske follow through.

Mex Mick

yop wrote: »

What funds? I won't have an offset account if Danske follow through.

The funds you are offsetting against your mortgage

yop

Mex Mick wrote: »

The funds you are offsetting against your mortgage

Your on about IF I still retained my Offset Current Accounts then I would also gain interest on those accounts?
I presume that most banks give interest on account, maybe they dont.

kennM

yop wrote: »

Your on about IF I still retained my Offset Current Accounts then I would also gain interest on those accounts?
I presume that most banks give interest on account, maybe they dont.

Deposit interest rates on current accounts is practically zero, also whatever interest there is is liable to dirt tax at 30something % at this stage. Deposit interest rates are also dropping. You may get circa 2% guaranteed, minus dirt tax after that. You also don't have access to the funds... typically it'll be locking in for 12/18 months to gain those rates.

In comparison to offset mortgage where you effectively get your mortgage interest rate on your current account with zero risk and 100% accessibility.

Got the bumf in the post today myself..... no clarity around benefit from prestige account, whether its retained or lost so difficult to actually do sums.... are we calculating prestige interest rate - 1% or is it less. I'll be lodging my complaint with Danske tomorrow and see where it goes.

Time to start looking for another provider in the meantime...

nicky5mx

Hello all,

I have been watching this forum closely as I have an offset which works brilliant as I do offset approx. 50% of my mortgage balance.

I think the Danske bank are taking the absolute p**s with the offer of reducing the interest rate by 1% (0.55% in reality if you have prestige discount). Granted it will depend on personal circumstances but for anybody off-setting a half decent amount of savings then the offer is an insult and should not be accepted. I guarantee that within 12 months we will be paying at least 4.5% to 5% as the bank will just want people to get lost and switch the mortgage to another bank. It will be open season for them once they think people will be stupid enough to agree to the offer.

I agree that anybody who is unhappy should write immediately (and not on their stupid e-banking app that they never reply to difficult questions) and inform the bank that they are breaching the terms of the original contract and the offer is not acceptable. I think they should be given 14 days to respond before the matter is referred to the ombudsman.

If enough people do this then they will have to think again about how they are dealing with this matter. It would indeed be a great help if people in this situation acted as a group instead of individuals. However the clock is ticking as 2 months is not a lot of time if it must be referred to the very slow wheels of the financial ombudsman.

In summary.......Fight this and under no circumstances accept unless you do not have much money to offset against. I can fully understand why somebody would want to accept the 1% offer if their circumstances are that the off-set does not save them much money each month.

dirtyblaster

Hi guys, got the letter today, and my offer is 1percent deduction which to be quite honest is poor. Wife and i have about 13 years to run out this mortgage and our wages are linked to two current accounts and two saving accounts. There is less than 10k there monthly as an offset credit so to speak but that gonna dry up now that they have pulled the plug. Any advice would be more than welcome.

dolallyoh

I complained using the internet messaging, to give the guy on the end credit he was quite happy to make it an official complaint so I didn't need to post in a letter (where would that go anyway!)

Everyone who isn't happy needs to officially complain.

Ombudsman says they have 40 days to respond.

kennM

Complaint gone... the 1% is an initial offer and I'm sure a portion of people will accept and off they'll go. Others will have to dig their heels in.....

Personally 1% is totally unacceptable. Ball is back in their court, gotta give them due opportunity to resolve themselves before taking it further.

nicky5mx

Personally I do not trust their banking app response to messages. I have an issue with TRS and have sent 3 messages on their app. They ignored them all until I picked up a phone last week. They are still "looking into" the matter, I think they do not care anymore and who can blame the people at the front-line given that they are getting a P45 very soon.

I will be sending my letter via registered post as no time for messing on this issue.

dirtyblaster

Thanks dolallyoh, will follow on from that and make complaint formally. I believe there must be terms and conditions which are connected to the mortgage. It seems they are breaching these, and offering basically a variable mortgage which will be sky high in coming years rate wise. Again the banks win, many thanks.

nicky5mx

just to add this from the financial ombudsman web-site

"According to the Consumer Protection Code a Provider must seek to resolve any complaints with consumers. You must first contact the Provider, outline your complaint and give it a reasonable opportunity to deal with it.
Your Financial Service Provider has 40 business days (i.e. approximately 2 months as this period does not include weekends or bank holidays) from the date you notified them of the issue within which to attempt to resolve your complaint "

...................................Interesting that the bank can close our accounts in 2 months which is the same amount of time that they have to respond to our complaint. Not trying to scare people but the time-frame is very tight. Lodge those complaints ASAP !!

dolallyoh

nicky5mx wrote: »

Personally I do not trust their banking app response to messages. I have an issue with TRS and have sent 3 messages on their app. They ignored them all until I picked up a phone last week. They are still "looking into" the matter, I think they do not care anymore and who can blame the people at the front-line given that they are getting a P45 very soon.

I will be sending my letter via registered post as no time for messing on this issue.

I now have an official complaint ref - that will be enough for me. Battle lines are drawn now.

kennM

Just remember, knowledge is power.... ultimately Danske bank are trying to change terms and conditions on a contract.

Their offer for offset mortgages is 1% reduction. I've had a quick look on bonkers.ie to compare mortgage variable rates. There are T&Cs but haven't bothered listing below, just as a gauge for rough comparisons for people.

KBC (LTV > 60% ànd up to 80%) - 3.99%
BOI - 4.1%
PTSB - 4.2%
EBS - 4.25%
AIB - 4.29%
Haven - 4.29%
BOI - 4.4%
KBC - 4.5%
EBS - 4.58%
Ulster Bank - 4.65%
ICS - 4.8%
Danske Bank - 4.95% (Offset according to their website is 4.7% APR)

So if they are offering 1% of standard variable (bear in mind there are absolutely no guarantees regarding future rate changes, that 1% increase last year is still fresh in my mind). Brings it down to 3.95%.

If its 1% off the offset mortgage rate than it brings it down to 3.7%.

If its 1% off the offset mortgage rate (also including the benefit from prestige (which I doubt, its not clear yet)) then it brings it down to 3.2%? Open to correction here...)

Ultimately it boils down to doing your sums. The nature of the offset and amount of savings will depend on your circumstances.

Do your sums... how much will an interest rate save you over the life of your mortgage vs. how much would you forsee if offset savings. There is a useful mortgage calculator on consumer help: http://www.consumerhelp.ie/getting-mortgage-calculator.

Hope it helps...

yop

Ok folks, page setup

https://www.facebook.com/DanskeRipOff

Spread the word, just share it and please ask those you know to share it.

I made contact with Sinead Ryan from the independent.ie who has been great previously in responding to one of my tweets, she has all the details and will probably drop in on these threads.

Stand firm, enjoy the ride!

yop

Complaint lodged via the application, time is of the essence on this, so I told them that any changes to my accounts before the complaint and issues with the offset mortgage are resolved will not be tolerated.

positron

I too got my sayonara letter yesterday from Danske.

I have a tracker mortgage with them (not Offset) and the letter says there is no change to the mortgage terms and conditions, except that I have to close my current account with them and give them a direct debit mandate to feed the mortgage from my new account in a different bank. They said they will put the TRS back into my account as well. So that sounds fair especially compared to the hard time you Offsetters are getting.

I guess I will miss Danske - they were a good bank to deal with their cool website and apps etc. Ulster Banks online banking looks very Windows 95-ish in comparison...

dolallyoh

I am actually a fan of the ulsterbank online system. It just times out a bit too fast for my liking. At least they have a chat facility.

earlyapex

I also got my letter package yesterday and have a tracker mortgage with Danske.
Now they want to change the terms of the mortgage agreement and close the feeder account they forced me to open as part of the terms and conditions of the mortgage which also state that there must be a standing order into this account to feed the mortgage.

This is the second attempt by them to change my terms and conditions. Last year they tried to charge me for this feeder account and I informed the financial regulator that they were attempting breach of contract. They agreed and told me they had settled this with Danske and I later received a letter from Danske stating everything would remain the same, no charges.

I will be informing Danske and the regulator about this again. What is to prevent Danske in the future deciding that I broke the terms of my mortgage in not having a standing order feeder and take the tracker away from me.

TALL1

Got my bye bye letter from Dankse in the post yesterday
Tells me a 1% reduction to the rate of interest will apply to my offset mortgage.
Rate is currently 4.6% less prestige discount of .45% giving rate of 4.15%
I spoke with chap in Dankse customer service who tells me rate payable post termination will be 3.6% ie. the 1% reduction is taken off the
4.6% not the discounted rate.
I also have a number of investment mortgages with Danske bank all variable that also have a .45% prestige discount. THe chap in Dankse was unable to confirm whether the prestige discount will apply post termination. I suspect not as I will no longer have a prestige current account as of 23 May 2014 as per their letter !!!

makeorbrake

earlyapex wrote: »

I will be informing Danske and the regulator about this again. What is to prevent Danske in the future deciding that I broke the terms of my mortgage in not having a standing order feeder and take the tracker away from me.

I'm in the same boat. Just have a non-fee based feeder account servicing the mortgage. What mechanism do you plan to use other than a standing order now that the feeder account is toast?

yop

Can I ask a blonde question.

I currently have a feeder account in NIB/Danske/showerofrobbingbandstands where they take the mortgage from each month. IF we leave, do we just setup a DD from Danske to the new bank account where it will take it from there or do we need to directly deposit into the Danske mortgage on a given date each month?

TALL1

HI makeorbreak

I have existing current account with AIB and moved direct debits etc over one by one over the last while
My plan at the moment is make one off transfers on repayment dates to the mortgage accounts.
It is interesting that the Dankse letter offers no help as to how u should make payments other than ' you must ensure you have arrangements in place to meet repayment obligations to us'. V helpful !

TALL1

Hi yop
I think you have yo make direct payment to the mortgage account.
There will no current/ feeder accounts once Dankse have finished this exercise